As Building Safety legislation has trickled in in the wake of the Grenfell Tower disaster, a series of new cases have been heard and have been the subject of judgments. Vainker & Anor v Marbank Construction Ltd & Ors [2024] EWHC 667 (TCC) is a lengthy and fact-heavy High Court judgment concerning a dispute between homeowners and both an architect under the standard terms of the RIBA Architect's Appointment 2010 (the Standard Conditions) and a contractor under an amended JCT Standard Building Contract Without Quantities 2011.
The judgement touches on:
- the recoverability of damages and fitness for habitation under the Defective Premises Act 1972 (the DPA);
- the nullification of net contribution clauses;
- questions of liability in the contexts of maintenance, remedial works, and mitigation;
- claims for distress and inconvenience;
- the Final Certificate/Final Statement; and
settlements with other parties.
Recoverability of Damages and Fitness for Habitation
The Court considered whether the sum of damages the defendant architect's/contractor's expert estimate (of the cost of remediating the defects) determined – here, a lower figure than the cost actually incurred – was in fact the appropriate sum of damages to award. Ultimately, the Court was unpersuaded by the argument that a remedial scheme could be considered 'disproportionate'. Instead the Court held that the damages awarded should accord with the actual and the what-is-inferred-to-be reasonable cost of the remedial works.
"A person taking on work for or in connection with the provision of a dwelling (whether the dwelling is provided by the erection or by the conversion or enlargement of a building) owes a duty—
(a)if the dwelling is provided to the order of any person, to that person; and
(b)without prejudice to paragraph (a) above, to every person who acquires an interest (whether legal or equitable) in the dwelling;
to see that the work which he takes on is done in a workmanlike or, as the case may be, professional manner, with proper materials and so that as regards that work the dwelling will be fit for habitation when completed."
Citing the duty under s1(1) of the DPA (above), the architect's counsel argued damages should be limited to the cost of the remedial works necessary to make the house fit for habitation, i.e. that construction of a dwelling must be undertaken in a workmanlike or professional manner with proper materials so that it is 'fit for habitation' when works are completed, notwithstanding the fact the DPA does not speak to the recoverability of damages. While the judgment rejects that line of argument, it does create an arguably new duty that closely mimics that of the DPA. Recoverable damages are equal to the cost of making the dwelling fit for habitation as would have been the case had the services been provided in a professional manner.
The judgment further defines the limits of 'fitness for habitation':
- Aesthetic or inconvenient defects are unlikely to render a dwelling unfit and minor or aesthetic defects which do not contribute to the question of fitness for habitation are neither relevant nor can be the subject of a determination of damages.
- When a defect that causes the condition of the dwelling to likely deteriorate over time and render it unfit for habitation is unfit for habitation at the time of practical completion.
- That the house in this case was meant to be a 'modern house in design' and not merely a new build is a relevant factor in determining fitness for habitation, although as this article will show, Employers remain liable where they are expected to perform maintenance on the property and have not done so.
Nullification of Net Contribution Clauses
The judgment sets out an excerpt from Clause 7.3 of the Standard Conditions, which contains a standard net contribution clause:
“… the liability of the Architect shall not exceed such sum as it is just and equitable for the Architect to pay having regard to the extent of the Architect’s responsibility for the loss and/or damage in question and on the assumptions that:
7.3.1 all other consultants and contractors providing work or services for the Project have provided to the Client contractual undertakings on terms no less onerous than those of the Architect under this Agreement;
…
7.3.3 all of the persons referred to in this clause have paid to the Client such sums as it would be just and equitable for them to pay having regard to the extent of their responsibility for that loss and/or damage.”
Section 6(3) of the DPA (below) renders void clauses which seek to limit liability resulting from the DPA.
"Any term of an agreement which purports to exclude or restrict, or has the effect of excluding or restricting, the operation of any of the provisions of this Act, or any liability arising by virtue of any such provision, shall be void."
The Court held that the net contribution clause was therefore void. Contractors must be conscious that to the extent the defects they are found to have caused render a dwelling unfit for habitation, their liability is not limited via a net contribution clause as has often been the understanding. However, though it was not strictly relevant to this case, the defendants, under the Civil Liability (Contribution) Act 1978, could potentially seek a contribution from the other.
Questions of liability in the contexts of maintenance and mitigation
Where the Employer is required to perform maintenance, which they have not performed because they claim they were not made able to do so by the Architect/Contractor, and as a result the works must be redone to remediate the consequent defect, the Court blames the Employer and does not award damages.
As is usually the case, the Claimant must take reasonable steps to mitigate their loss. Neither waiting to see the 'full picture' as to the underlying causes of the defect constitutes a failure to mitigate nor where the Employer has failed to afford a Contractor the opportunity to mitigate their own defects and instead instructs another contractor in lieu.
Distress and Inconvenience
In assessing claims for distress and inconvenience, the Court sets out that:
- The highest amount of damages should be a maximum of £3,000 per annum (though this was subject to inflation when first determined in a case reported in 2015);
- The Claimant's occupancy is not relevant;
- The Claimant is 'a person of reasonable robustness'; and
- The court, while taking a 'broad brush approach', must consider the impact of the distinct defects over time.
Here, the court awarded a sum lower than the maximum.
Final Certificate/Final Statement
The Court held that it is necessary to take into account the sums that would have been due had a further interim certificate or Final Certificate/Final Statement been issued where it is absent. This may be, for example and as was submitted in this case, because a Certificate of Making Good Defects had never been issued.
Settlements with other parties
The Court held that a settlement with a designer was strong evidence that the Contractor was not to be held liable. Parties should therefore be mindful of how the existence of settlement agreements can be used to influence the Court.
